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Costco's (COST) Q4 Earnings Top, Comparable Sales Up 1.1%
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Costco Wholesale Corporation (COST - Free Report) came up with fourth-quarter fiscal 2023 results, wherein the top and bottom lines not only beat the Zacks Consensus Estimate but also increased year over year. Comparable sales also showcased a decent improvement, with the growth rate accelerating on a sequential basis. While Costco's e-commerce sales reported a decline, the quarter showed improvement compared to the preceding quarters.
Q4 Earnings & Sales Picture
Costco's fourth-quarter earnings per share came in at $4.86, comfortably exceeding the consensus estimate of $4.71 and reflecting substantial growth from $4.20 per share reported in the same period the previous year. This increase in earnings can be attributed to a combination of factors, including strong sales growth, higher membership fee income, improved gross margins and efficient operations.
Total revenues, comprising net sales and membership fees, reached $78,939 million, marking a 9.5% increase from the prior-year quarter. This figure also surpassed the Zacks Consensus Estimate of $78,563 million.
In the fourth quarter, Costco's comparable e-commerce sales declined 0.8% year over year, representing an improvement compared to the 10% decline witnessed in the third quarter. Excluding the impact of gasoline prices and foreign exchange, the metric declined by 0.6% year over year.
Costco Wholesale Corporation Price, Consensus and EPS Surprise
Costco's net sales exhibited robust growth, increasing 9.4% year over year to reach $77,430 million, while membership fees saw a 13.7% increase, reflecting a total of $1,509 million in the reported quarter. The company's growth strategies, improved price management and favorable membership trends have all played pivotal roles in contributing to its overall performance.
For the quarter in focus, we had anticipated 7.9% jump in net sales coupled with 6.1% increase in total membership fees.
Comparable sales rose 1.1% from the prior-year quarter, indicating a notable acceleration from the 0.3% increase recorded in the third quarter. Comparable sales for the quarter under discussion reflect an improvement of 0.2%, 1.8% and 5.5% in the United States, Canada and Other International locations, respectively. Notably, this robust performance exceeded our expectations of 0.7% growth in comparable sales for the fourth quarter.
Traffic or shopping frequency rose 5.2% globally and 5% in the United States. However, the average transaction or ticket was down 3.9% globally and 4.5% in the United States.
Excluding the impact of foreign currency fluctuations and gasoline prices, the company witnessed comparable sales growth of 3.8% in the quarter. The United States, Canada and Other International locations registered comparable sales growth of 3.1%, 7.4% and 4.4%, respectively.
Costco's gross margin expanded 42 basis points to 10.6%, faring better than our expectation of 30 basis-point expansion. The operating income in the quarter increased 11.4% year over year to $2,781 million. Meanwhile, the operating margin (as a percentage of total revenues) remained unchanged at 3.5%.
Store Update
Costco currently operates 861 warehouses. These include 591 in the United States and Puerto Rico, 107 in Canada, 40 in Mexico, 33 in Japan, 29 in the United Kingdom, 18 in Korea, 15 in Australia, 14 in Taiwan, five in China, four in Spain, two in France and one each in Iceland, New Zealand and Sweden.
In the fourth quarter, Costco opened nine net new warehouses, including five new buildings in the United States, two in China and one each in Japan and Australia.
For fiscal 2023, the company opened 23 net new units and relocated three. Additionally, in the first quarter of fiscal 2024, Costco plans to open 10 net new warehouses and relocate one. The majority of these new warehouse locations are in the United States, with one in Canada.
Financial Aspects
Costco ended the reported quarter with cash and cash equivalents of $13,700 million and long-term debt (excluding the current portion) of $5,377 million. Shareholders’ equity was $25,058 million. Management incurred capital expenditures of roughly $1.56 billion in the fourth quarter.
Shares of this Zacks Rank #3 (Hold) company have risen 19.4% year to date against the industry’s decline of 1.2%.
The Zacks Consensus Estimate for Grocery Outlet’s current financial-year sales and earnings suggests growth of 11.2% and 4.9%, respectively, from the year-ago reported numbers. GO has a trailing four-quarter earnings surprise of 14.3%, on average.
Ross Stores, which operates off-price retail apparel and home fashion stores, currently carries a Zacks Rank #2.
The Zacks Consensus Estimate for Ross Stores’ current financial-year sales and earnings indicates growth of 8.1% and 19.4%, respectively, from the year-ago reported numbers. ROST has a trailing four-quarter earnings surprise of 11.4%, on average.
Walmart, which operates a chain of hypermarkets, discount department stores and grocery stores, currently carries a Zacks Rank #2.
The Zacks Consensus Estimate for Walmart’s current financial-year sales and earnings implies growth of 9.2% and 2.2%, respectively, from the year-ago reported numbers. WMT has a trailing four-quarter earnings surprise of 11.6%, on average.
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Costco's (COST) Q4 Earnings Top, Comparable Sales Up 1.1%
Costco Wholesale Corporation (COST - Free Report) came up with fourth-quarter fiscal 2023 results, wherein the top and bottom lines not only beat the Zacks Consensus Estimate but also increased year over year. Comparable sales also showcased a decent improvement, with the growth rate accelerating on a sequential basis. While Costco's e-commerce sales reported a decline, the quarter showed improvement compared to the preceding quarters.
Q4 Earnings & Sales Picture
Costco's fourth-quarter earnings per share came in at $4.86, comfortably exceeding the consensus estimate of $4.71 and reflecting substantial growth from $4.20 per share reported in the same period the previous year. This increase in earnings can be attributed to a combination of factors, including strong sales growth, higher membership fee income, improved gross margins and efficient operations.
Total revenues, comprising net sales and membership fees, reached $78,939 million, marking a 9.5% increase from the prior-year quarter. This figure also surpassed the Zacks Consensus Estimate of $78,563 million.
In the fourth quarter, Costco's comparable e-commerce sales declined 0.8% year over year, representing an improvement compared to the 10% decline witnessed in the third quarter. Excluding the impact of gasoline prices and foreign exchange, the metric declined by 0.6% year over year.
Costco Wholesale Corporation Price, Consensus and EPS Surprise
Costco Wholesale Corporation price-consensus-eps-surprise-chart | Costco Wholesale Corporation Quote
Delving Deeper
Costco's net sales exhibited robust growth, increasing 9.4% year over year to reach $77,430 million, while membership fees saw a 13.7% increase, reflecting a total of $1,509 million in the reported quarter. The company's growth strategies, improved price management and favorable membership trends have all played pivotal roles in contributing to its overall performance.
For the quarter in focus, we had anticipated 7.9% jump in net sales coupled with 6.1% increase in total membership fees.
Comparable sales rose 1.1% from the prior-year quarter, indicating a notable acceleration from the 0.3% increase recorded in the third quarter. Comparable sales for the quarter under discussion reflect an improvement of 0.2%, 1.8% and 5.5% in the United States, Canada and Other International locations, respectively. Notably, this robust performance exceeded our expectations of 0.7% growth in comparable sales for the fourth quarter.
Traffic or shopping frequency rose 5.2% globally and 5% in the United States. However, the average transaction or ticket was down 3.9% globally and 4.5% in the United States.
Excluding the impact of foreign currency fluctuations and gasoline prices, the company witnessed comparable sales growth of 3.8% in the quarter. The United States, Canada and Other International locations registered comparable sales growth of 3.1%, 7.4% and 4.4%, respectively.
Costco's gross margin expanded 42 basis points to 10.6%, faring better than our expectation of 30 basis-point expansion. The operating income in the quarter increased 11.4% year over year to $2,781 million. Meanwhile, the operating margin (as a percentage of total revenues) remained unchanged at 3.5%.
Store Update
Costco currently operates 861 warehouses. These include 591 in the United States and Puerto Rico, 107 in Canada, 40 in Mexico, 33 in Japan, 29 in the United Kingdom, 18 in Korea, 15 in Australia, 14 in Taiwan, five in China, four in Spain, two in France and one each in Iceland, New Zealand and Sweden.
In the fourth quarter, Costco opened nine net new warehouses, including five new buildings in the United States, two in China and one each in Japan and Australia.
For fiscal 2023, the company opened 23 net new units and relocated three. Additionally, in the first quarter of fiscal 2024, Costco plans to open 10 net new warehouses and relocate one. The majority of these new warehouse locations are in the United States, with one in Canada.
Financial Aspects
Costco ended the reported quarter with cash and cash equivalents of $13,700 million and long-term debt (excluding the current portion) of $5,377 million. Shareholders’ equity was $25,058 million. Management incurred capital expenditures of roughly $1.56 billion in the fourth quarter.
Shares of this Zacks Rank #3 (Hold) company have risen 19.4% year to date against the industry’s decline of 1.2%.
3 Picks You Can’t Miss Out On
Here, we have highlighted three better-ranked stocks, namely Grocery Outlet (GO - Free Report) , Ross Stores (ROST - Free Report) and Walmart (WMT - Free Report) .
Grocery Outlet, an extreme value retailer of quality, name-brand consumables and fresh products, currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Grocery Outlet’s current financial-year sales and earnings suggests growth of 11.2% and 4.9%, respectively, from the year-ago reported numbers. GO has a trailing four-quarter earnings surprise of 14.3%, on average.
Ross Stores, which operates off-price retail apparel and home fashion stores, currently carries a Zacks Rank #2.
The Zacks Consensus Estimate for Ross Stores’ current financial-year sales and earnings indicates growth of 8.1% and 19.4%, respectively, from the year-ago reported numbers. ROST has a trailing four-quarter earnings surprise of 11.4%, on average.
Walmart, which operates a chain of hypermarkets, discount department stores and grocery stores, currently carries a Zacks Rank #2.
The Zacks Consensus Estimate for Walmart’s current financial-year sales and earnings implies growth of 9.2% and 2.2%, respectively, from the year-ago reported numbers. WMT has a trailing four-quarter earnings surprise of 11.6%, on average.